Are Parent Loans Eligible for Forgiveness?

Parent PLUS loans are federal student loans taken out by parents to help cover the costs of their child’s undergraduate or graduate education. Unlike student loans, repayment responsibility rests solely with the parent. While forgiveness for Parent PLUS loans may seem challenging compared to other federal student loan types, it is possible under specific circumstances through federal programs. This article explores pathways to Parent PLUS loan forgiveness.

Parent PLUS Loans and Forgiveness Eligibility

Parent PLUS loans are federal Direct Loans, but have different eligibility for income-driven repayment (IDR) plans than other federal student loans. By default, Parent PLUS loans do not qualify for most IDR plans, which are often the gateway to loan forgiveness after a set period of payments. Many federal loan forgiveness programs are tied to IDR plan participation.

To access IDR plans and associated forgiveness, Parent PLUS loans typically must be consolidated into a Direct Consolidation Loan. A Direct Consolidation Loan combines multiple federal student loans into a single new loan with one servicer and one monthly payment. This process changes the underlying loan type, making it eligible for certain IDR plans that were previously unavailable.

Public Service Loan Forgiveness (PSLF) is another potential avenue for Parent PLUS loan forgiveness. While PSLF does not strictly require consolidation for Parent PLUS loans, as they are Direct Loans, consolidation can be beneficial if the parent intends to make qualifying payments under an IDR plan. Private parent loans are not eligible for federal loan forgiveness programs.

Key Forgiveness Programs for Parent PLUS Loans

Public Service Loan Forgiveness (PSLF) offers a path to forgiveness for Parent PLUS loan borrowers who work full-time for a qualifying government or non-profit organization. To qualify, borrowers must make 120 qualifying monthly payments while employed by a qualifying employer. Payments must be made under a qualifying repayment plan, typically an Income-Contingent Repayment (ICR) Plan after consolidation, or another IDR plan if a specific consolidation strategy is used.

Income-Driven Repayment (IDR) forgiveness is another option available after a Parent PLUS loan is included in a Direct Consolidation Loan. Once consolidated, the loan becomes eligible for the Income-Contingent Repayment (ICR) Plan, the only IDR plan directly accessible to consolidated Parent PLUS loans. Under ICR, monthly payments are capped at 20% of discretionary income, or the amount paid on a 12-year fixed repayment plan, whichever is less. Any remaining loan balance is forgiven after 25 years of qualifying payments.

Other IDR plans, such as Income-Based Repayment (IBR), Pay As You Earn (PAYE), or Revised Pay As You Earn (REPAYE), generally offer more favorable payment terms or shorter forgiveness periods (20 years). Accessing these plans with a consolidated Parent PLUS loan often requires “double consolidation,” creating a new Direct Consolidation Loan from an existing one to open eligibility. Parent PLUS loans may also be discharged in less common circumstances, such as Total and Permanent Disability (TPD) discharge, where a borrower is deemed unable to work due to a medical condition, or Death Discharge, if the borrower or the student passes away.

Steps to Qualify for Forgiveness

For IDR forgiveness, Parent PLUS loan borrowers must first apply for a Direct Consolidation Loan. This application can be completed online at StudentAid.gov. Borrowers will need to provide personal information, details about their existing federal student loans, and select a loan servicer for the consolidated loan. The consolidation process typically takes 30 to 90 days to complete, during which time interest continues to accrue on the original loans.

After consolidation, borrowers must select an eligible repayment plan. For consolidated Parent PLUS loans, the Income-Contingent Repayment (ICR) Plan is the most direct option for IDR. To access other IDR plans like PAYE or REPAYE, a second consolidation step (double consolidation) is required after the first consolidation is complete.

For Public Service Loan Forgiveness (PSLF), borrowers must ensure they are making qualifying payments while employed full-time by a qualifying employer. A qualifying payment is defined as a full, on-time payment made after October 1, 2007, under a qualifying repayment plan, and while working for an eligible employer. Borrowers should use the PSLF Help Tool on StudentAid.gov to certify their employment annually or whenever they change employers. This tool helps track progress towards the 120 required payments and ensures that employment meets the PSLF criteria.

The PSLF Employment Certification Form, integrated into the PSLF Help Tool, requires employer information (including EIN) and dates of employment. The employer must sign this form to verify employment details. Submitting this form regularly helps to confirm that payments are counting towards PSLF eligibility and identifies any potential issues early in the process.

Applying for Forgiveness

After making 120 qualifying PSLF payments and certifying employment, submit the PSLF application. This application, available through the PSLF Help Tool on StudentAid.gov, formally requests forgiveness of the remaining loan balance. The application requires updated employment information and confirmation that all eligibility criteria have been met.

The completed PSLF application can be submitted electronically via StudentAid.gov or mailed to MOHELA, the designated PSLF servicer. After submission, borrowers should expect a processing period that can range from several weeks to a few months. During this time, MOHELA reviews the application to verify all qualifying payments and employment periods before determining eligibility for forgiveness. Borrowers will receive notification regarding the status of their application, and any remaining eligible loan balance will be discharged.

For IDR forgiveness, the process is generally automatic once the required payment period (typically 20 or 25 years) is reached. Borrowers must remain enrolled in an eligible IDR plan and consistently make their scheduled payments for the entire duration. The loan servicer is responsible for tracking the qualifying payments and will initiate the forgiveness process when the required number of years has been met.

To remain on an IDR plan, borrowers are required to recertify their income and family size annually. This annual recertification ensures that monthly payments are accurately calculated based on current financial circumstances. This process can be completed online through StudentAid.gov or by submitting documentation directly to the loan servicer. Timely recertification is important to avoid being removed from the IDR plan, which could delay or jeopardize eligibility for forgiveness.